/SEC Orders Cease-and-Desist to Registered Investment Adviser for Multiple Violations of the Advisers Act

SEC Orders Cease-and-Desist to Registered Investment Adviser for Multiple Violations of the Advisers Act

WHAT HAPPENED?

On June 4th, 2018, the Securities and Exchange Commission (SEC) released its order instituting administrative and cease-and-desist proceedings against a registered investment adviser (“Respondent”) found to be in multiple violations of the Advisers Act.

The SEC Office of Compliance Inspections and Examinations (OCIE) conducted an examination of the Respondent beginning in December 2014.  During the examination, OCIE found the Respondent to be in an undisclosed agreement with two affiliated outside asset managers (“Third-Party Advisers”).  The arrangement required the Third-Party Advisers to pay the Respondent based on the amount of client assets Respondent invested in funds advised by the Third-Party.  From July 2012 through September 2014, the Respondent received approximately $648,000 in fees.

In addition, the Respondent failed to maintain policies and procedures designed to detect and prevent conflicts of interest.  The Respondent also neglected to keep accurate books and records to reflect the fees being received from the Third-Party Advisers.

The SEC ordered Respondent to cease-and-desist from committing any further, or future, violations of the Advisers Act and issued a civil monetary penalty of $500,000.

WHAT DOES THIS MEAN FOR ME?

OCIE continues to focus on the disclosure of conflicts of interest and calculation of fees, expenses, and other charges as examination priorities.  If you have any questions about this case and how it might relate to you or your firm, please reach out to Fairview® directly.

About the Author:

Fairview®
Founded in 2005 with the goal of developing streamlined back office solutions for investment advisers, Fairview® is now servicing investment advisers, foundations and funds with over $185 billion in collective assets.